2004 (3) TMI 723 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to order directing deposit of tax demand under Punjab General Sales Tax Act, 1948 based on amendment; Interpretation of amended provision of section 20(5) of the Act; Retrospective effect of the amended provision; Vested right of appeal; Commencement of lis under taxation laws; Applicability of pre-amendment provisions to cases where lis commenced before amendment.

Analysis:
The judgment pertains to three writ petitions challenging an order by the Sales Tax Tribunal, Punjab, directing the deposit of 25% of the tax demand under the Punjab General Sales Tax Act, 1948. The petitioners contended that the amendment to section 20(5) of the Act, requiring a prior minimum payment of 25% of tax, penalty, and interest, should not apply retrospectively. The Court examined the amendment and held that it did not have retrospective effect.

A separate judgment by the same Bench highlighted the principle that the right of appeal is a vested right, to be determined at the commencement of the lis. Referring to various Supreme Court judgments, the Court emphasized that the law prevailing at the time of the institution of the suit or proceeding governs the right of appeal. The Court clarified that the commencement of the lis under taxation laws occurs when returns are filed or required to be filed, and the right of appeal is vested at that point.

Considering that the returns in the writ petitions were filed before the amendment, the Court concluded that the pre-amendment provisions of the Act should apply. As a result, the writ petitions were allowed, setting aside the Tribunal's order and directing a fresh decision in line with the Court's findings. The judgment underscores the importance of vested rights in appeals and the application of relevant laws at the commencement of legal proceedings, particularly in taxation matters.